Without congressional action, about $85 billion inacross-the-board spending cuts are set to begin on March 1. Ifallowed to continue, they could slow economic growth this year,according to the non-partisan Congressional Budget Office.

The savings, known in Washington as the "sequester," wouldcut into most military and domestic programs. Worse, they wouldbe compressed into a short time frame of March 1-Sept. 30, whenWashington's fiscal year ends.

And so House Democrats have proposed substituting the $85billion "meat-ax" approach to deficit reduction with a mix ofspending cuts and tax hikes, although it is not clear if thatwill be embraced by President Barack Obama.

In a taunt to Republicans who oppose any tax increases toreduce deficits, Democrats are again aiming at squeezing morerevenues out of the wealthy to help bring down the debt. It is agambit they successfully deployed weeks ago when a "fiscalcliff" deal raised around $600 billion over 10 years by lettingincome tax rates rise on high earners.

"They (Republicans) have to tell the American people whetherthey care more about protecting special-interest tax breaks likethose for big oil companies or whether they care about defensespending and economic growth," said Democratic RepresentativeChris Van Hollen of Maryland. He spoke to Reuters on thesidelines of a three-day House Democratic retreat.

Most of the Democrats' savings ideas already have beenfloated in past legislative debates.

Van Hollen, the senior Democrat on the House BudgetCommittee, said that under their plan, tax deductions for thevery wealthy would be limited by phasing in a 30 percenteffective tax rate for those earning more than $1 million ayear.

This minimum tax would be separate from the income tax hikethat started on Jan. 1 for households with incomes above$450,000 a year.

These added revenues for the Treasury, Van Hollen said,would be further augmented by eliminating a long-held tax breakfor the profitable oil and gas industry. And on the spendingside, Democrats would end government payments to farmers largely enjoyed by big agricultural operations.

Asked whether he thought Obama would publicly embrace thesesavings to head off the sequester, possibly next week in hisState of the Union address to Congress, Van Hollen said: "Wedon't know exactly." He added, "There are other things thatcould be put into the mix" as well.

Those, he said, could include cutting the "carried interest"tax break enjoyed by investment managers. It allows mostlyaffluent individuals to pay a 20 percent capital gains tax rateon a big chunk of their income, rather than the top ordinaryincome tax rate of about 40 percent.

Another Obama move, Van Hollen said, could be ending a taxbreak for corporate jets, an idea that was kicked around in 2011and at one point was supported by some key Republicans.

'DEFINITION OF DYSFUNCTION'

In 2013, Republicans are arguing that the Washington taxhike game is over now that Democrats successfully raised rateson the rich at the start of the new year.

"My constituents in Kentucky and the American people,"warned Senate Republican leader Mitch McConnell on Thursday,"will not accept another tax increase to put off a spending cutthat the two parties have already agreed to. It's the definitionof dysfunction."

McConnell faces a possible Republican primary challenge in2014 from the more conservative wing of his party.

But after significant victories in last November's electionsthat saw Obama win a second term and his fellow Democrats pickup seats in the Senate and House, the party is trying to blockthe non-military spending cuts that they argue will hit mainlythe poor and middle classes.

Ratcheting up a public relations campaign to warn of heavyfederal government job cuts, Maryland Democratic Senator BenCardin was to visit the National Institutes of Health insuburban Washington on Friday to discuss "how the latest federalbudget battles and looming sequestration may affect you."

A new Hart Research poll released by Americans For TaxFairness found that two-thirds of those surveyed support highertaxes on the top 2 percent and corporations, and that a majorityopposes the Republican spending-cut-only approach.

Buoyed by that kind of poll, Obama on Thursday told HouseDemocrats who are gathered here that he welcomed a budget debatein the "court of public opinion."

While he gave passing mention to reforming large governmentprograms that Republicans want to cut for major savings - andwhere long-term deficit-reduction might be most achievable - thepresident mainly talked about reining in favorable tax treatmentfor the rich.

"We sure as heck should be willing to ask those of us whoare luckiest in this society to close a few loopholes anddeductions that the average American doesn't get," Obama said.

Republicans have argued that doing so would slow economicgrowth.

Democrats here countered that argument with a recentlyreleased government report in which a slight contraction in theeconomy for the last three months of 2012 was partially blamedon slowing government spending.